Legislature(2023 - 2024)BARNES 124

02/05/2024 03:15 PM House LABOR & COMMERCE

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Audio Topic
03:17:06 PM Start
03:17:31 PM Executive Order 135 - Eliminating the Alaska Safety Advisory Council
03:30:50 PM HB251
03:44:58 PM HB237
03:47:45 PM HB289
04:13:57 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ EO 135: ELIMINATING THE ALASKA SAFETY ADVISORY TELECONFERENCED
COUNCIL
Heard & Held
-- Public Testimony --
*+ HB 289 BUSINESS LICENSE FEES TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 251 EXEMPTIONS FOR HOMEMADE FOODS TELECONFERENCED
Heard & Held
*+ HB 237 TEMPORARY PERMIT FOR LAPSED NURSE LICENSE TELECONFERENCED
Heard & Held
                  HB 289-BUSINESS LICENSE FEES                                                                              
                                                                                                                                
3:47:45 PM                                                                                                                    
                                                                                                                                
CHAIR SUMNER announced that the  final order of business would be                                                               
HOUSE BILL  NO. 289, "An  Act relating to business  license fees;                                                               
and providing for an effective date."                                                                                           
                                                                                                                                
3:48:36 PM                                                                                                                    
                                                                                                                                
JULIE  SANDE, Commissioner,  Department  of Commerce,  Community,                                                               
and   Economic   Development   (DCCED),  began   the   PowerPoint                                                               
presentation, titled  "Business License Fees"  [hardcopy included                                                               
in committee  packet], on slide 1.   She explained that  the bill                                                               
proposes to return business license  fees to the amount they were                                                               
in  2008.   She  shared that  she serves  on  the Alaska  Tourism                                                               
Industry Board as well as  the Alaska Seafood Marketing Institute                                                               
(ASMI) Board,  and she highlighted  the marketing work  that both                                                               
organizations do.   She shared that the governor  has an interest                                                               
in reaching out to business owners  to learn more about what they                                                               
need in order  to conduct business in Alaska.   She said that the                                                               
needs included  workforce, housing, childcare, and  energy costs;                                                               
the  prevailing  need  is  determining how  to  "tell  our  story                                                               
better."  She  said she is not interested  in building government                                                               
just  to build  government; therefore,  effort was  made to  fund                                                               
costs within the department.                                                                                                    
                                                                                                                                
3:53:13 PM                                                                                                                    
                                                                                                                                
SYLVAN  ROBB, Director,  Division of  Corporations, Business  and                                                               
Professional  Licensing, Department  of Commerce,  Community, and                                                               
Economic  Development,  moved   to  and  read  slide   2  of  the                                                               
presentation,  which   read  as  follows   [original  punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     What Does HB 289 Do?                                                                                                       
                                                                                                                                
      Increases regular business license fees from $50 to                                                                       
     $100 per year                                                                                                              
                                                                                                                                
      Increases    business    license   fees    for    sole                                                                    
     proprietorships   owned  by   a  disabled   veteran  or                                                                    
     individual who is 65 years of  age or older from $25 to                                                                    
     $50 per year                                                                                                               
                                                                                                                                
      Increases tobacco  endorsement fees from $100  to $200                                                                    
     per renewal                                                                                                                
                                                                                                                                
MS. ROBB transitioned to and summarized slide 3, which read as                                                                  
follows [original punctuation provided]:                                                                                        
                                                                                                                                
     Why Increase These Fees?                                                                                                   
                                                                                                                                
      All  funds  received each  fiscal  year  in excess  of                                                                    
     what's required  to run the business  licensing program                                                                    
     are deposited into UGF                                                                                                     
                                                                                                                                
      Increasing  business  licensing  fees   is  a  way  to                                                                    
     generate  additional revenue  for the  State of  Alaska                                                                    
     without  heavily impacting  one profession  or industry                                                                    
     over another                                                                                                               
                                                                                                                                
3:55:04 PM                                                                                                                    
                                                                                                                                
MS. ROBB moved to slide 4 and summarized the slide, which read                                                                  
as follows [original punctuation provided]:                                                                                     
                                                                                                                                
     When  is  a  Business License  or  Tobacco  Endorsement                                                                    
     Required?                                                                                                                  
                                                                                                                                
      A business  license is required  for the  privilege of                                                                    
     engaging  in a  business  in the  State  of Alaska  (AS                                                                    
     43.70.020(a))                                                                                                              
                                                                                                                                
      "Business"  means a  for-profit  or non-profit  entity                                                                    
     engaging or offering  to engage in a  trade, a service,                                                                    
     a  profession,   or  an  activity  with   the  goal  of                                                                    
     receiving  a  financial  benefit in  exchange  for  the                                                                    
     provision  of services,  or goods,  or other  property.                                                                    
     (AS 43.70.110(1))                                                                                                          
                                                                                                                                
      A  person  who   sells  cigarettes,  cigars,  products                                                                    
     containing  tobacco,  electronic smoking  products,  or                                                                    
     products containing nicotine as  a retailer must have a                                                                    
     business  license  and  a  [tobacco]  endorsement.  (AS                                                                    
     43.70.105(b))                                                                                                              
                                                                                                                                
MS. ROBB  advanced to  and read  slide 4,  which read  as follows                                                               
[original punctuation provided]:                                                                                                
                                                                                                                                
     When is a Business License Not Required?                                                                                   
                                                                                                                                
     Business license exemptions (AS 43.70.105):                                                                                
                                                                                                                                
      Fisheries business                                                                                                        
      Sale of liquor under a license issued under AS 04.11                                                                      
      Insurance business                                                                                                        
      Mining business                                                                                                           
      Supplying services as an employee                                                                                         
      Furnishing goods or services by  a person who does not                                                                    
     represent to  be regularly engaged in  furnishing goods                                                                    
     or services                                                                                                                
      Activities  of an  investment club  as  defined in  AS                                                                    
     43.70.105(7)                                                                                                               
      Bank organized under  AS 06.05 or the  laws of another                                                                    
     state                                                                                                                      
      National bank chartered by the U.S.                                                                                       
      Credit union organized  under AS 06.45 or  the laws of                                                                    
     another state                                                                                                              
      Credit union  regulated by  the National  Credit Union                                                                    
     Administration                                                                                                             
      Mutual  savings  bank  chartered  under  AS  06.15  or                                                                    
     organized under the laws of another state                                                                                  
                                                                                                                                
3:56:53 PM                                                                                                                    
                                                                                                                                
MS.  ROBB moved  to  slide 6  to present  a  graph depicting  the                                                               
number of  business licenses  and pointed  out that  the licenses                                                               
continued  to increase.   She  advised  that the  2023 figure  of                                                               
22,623 business licenses is the  number of people who purchased a                                                               
business  license  that, not  the  total  number of  licenses  in                                                               
Alaska, which is 100,000.   She moved to slide 7  to show a graph                                                               
of the number of businesses.   She advanced to slide 8 to present                                                               
a graph  that shows the  number of businesses licenses  that hold                                                               
endorsements.   Ms. Robb  transitioned to slide  9 to  showcase a                                                               
graph of  business license  revenue.  She  concluded on  slide 10                                                               
with the resources used in the PowerPoint.                                                                                      
                                                                                                                                
3:59:46 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE FIELDS asked, if all  $2.7 million were put toward                                                               
additional staff, how  many staff that would  support and whether                                                               
it would speed up current backlogs.                                                                                             
                                                                                                                                
MS. ROBB  explained that current professional  licensing statutes                                                               
are  separate  from  business  license revenue.    She  said  the                                                               
division is  required to  charge an  amount for  the professional                                                               
licensing  fees that  is  about  equal to  the  cost  to run  the                                                               
program.  She noted that  the legislature granted the division 12                                                               
additional positions.                                                                                                           
                                                                                                                                
REPRESENTATIVE  FIELDS asked  if  the bill  could  be tweaked  to                                                               
provide more help and augment the fees.                                                                                         
                                                                                                                                
4:01:19 PM                                                                                                                    
                                                                                                                                
CHAIR SUMNER  commented that Representative Fields  is describing                                                               
a fee, whereas this is a tax.                                                                                                   
                                                                                                                                
4:01:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER  asked about Commissioner  Sande's comment                                                               
that the  bill would restore  business license fees  to pre-COVID                                                               
levels.                                                                                                                         
                                                                                                                                
COMMISSIONER  SANDE reiterated  that the  bill would  restore the                                                               
fees to 2008 levels.                                                                                                            
                                                                                                                                
REPRESENTATIVE  SADDLER sought  clarification that  the fee  went                                                               
from  $100  to $50  in  2008  and is  now  being  proposed to  be                                                               
returned  to  $100.    He  further asked  if  a  higher  fee  was                                                               
considered to account for inflation.                                                                                            
                                                                                                                                
COMMISSIONER  SANDE  responded that,  as  a  business owner,  the                                                               
change from  $50 to $100 isn't  going to cause her  to decide not                                                               
to go into  business.  She said the division  is comfortable with                                                               
$100 and may consider $150 in the future.                                                                                       
                                                                                                                                
REPRESENTATIVE SADDLER  pointed out that the  fiscal note assumes                                                               
no growth in the number of licenses.                                                                                            
                                                                                                                                
4:04:09 PM                                                                                                                    
                                                                                                                                
MS.  ROBB  explained  that  fiscal   notes  do  not  account  for                                                               
inflation.   She  said it  would  be challenging  to project  the                                                               
increase in  business licensing that the  division anticipates in                                                               
the future.   In response to a follow-up  question, she explained                                                               
that  business   license  fees  were  waived   during  the  COVID                                                               
pandemic;  that may  have artificially  influenced the  number of                                                               
businesses  licenses that  were given  out.   She said  there has                                                               
been an increase in business licenses over the past few years.                                                                  
                                                                                                                                
CHAIR  SUMNER advised  members that  Mr. Gunther  was present  to                                                               
explain the difference between a tax and a fee.                                                                                 
                                                                                                                                
4:06:50 PM                                                                                                                    
                                                                                                                                
CONRAN   GUNTHER,    Attorney,   Legislative    Legal   Services,                                                               
Legislative Affairs  Agency, said he  is not aware of  any Alaska                                                               
cases that  distinguish between a  fee and  a tax.   He explained                                                               
that  a tax  is a  levy  of funds  to raise  revenue for  general                                                               
government  purposes,  while  a  fee is  a  voluntarily  incurred                                                               
change to  obtain a government  benefit with fees that  relate to                                                               
the cost of the benefit.                                                                                                        
                                                                                                                                
CHAIR SUMNER  asked, if a  proposal were  made to double  the fee                                                               
with  all  the additional  revenue  going  to the  general  fund,                                                               
whether that would be a tax.                                                                                                    
                                                                                                                                
MR. GUNTHER  explained that under  Article IX, Section 7,  of the                                                               
Constitution of the State of Alaska,  any proceeds of a state tax                                                               
or  license can  be dedicated  and go  to the  general fund.   He                                                               
shared that there  may be other examples around whether  a fee is                                                               
excessive.                                                                                                                      
                                                                                                                                
4:08:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  PRAX  asked if  the  licensing  fee is  like  the                                                               
driver's license fee.                                                                                                           
                                                                                                                                
MS.  ROBB explained  that the  fees are  referred to  as business                                                               
license  fees since  that is  how they  are outlined  in statute.                                                               
She added that  the legislature spoke to the fact  that the money                                                               
collected  by  the  department   under  AS  43.70.080  should  be                                                               
deposited into  the general fund; this  indicates that additional                                                               
funds would  be generated  beyond the costs  required to  run the                                                               
program.                                                                                                                        
                                                                                                                                
4:10:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RUFFRIDGE asked about  the fee increase not having                                                               
a  detrimental affect  on  the  number of  licenses  issued.   He                                                               
commented  that the  fee waving  during COVID  might have  caused                                                               
more licenses to  be issued.  He asked what  licensing fee figure                                                               
would discourage someone from starting a business.                                                                              
                                                                                                                                
MS.  ROBB answered  that the  fee  increase does  not impact  one                                                               
industry.                                                                                                                       
                                                                                                                                
4:11:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER pointed  to and  read slide  3, regarding                                                               
the increase of  business licensing fees as a  source of revenue.                                                               
He asked  for an explanation  of how the  licensing fee is  a fee                                                               
and not a tax.                                                                                                                  
                                                                                                                                
MS. ROBB  answered that the  department has referred  to business                                                               
licensing  as a  fee, as  does  state statute.   She  highlighted                                                               
again  that   there  is  statute  directing   that  excess  funds                                                               
generated return to the general fund.                                                                                           
                                                                                                                                
4:13:51 PM                                                                                                                    
                                                                                                                                
CHAIR SUMNER announced that HB 289 was held over.                                                                               

Document Name Date/Time Subjects
HB 289 Transmittal Letter 1.22.24.pdf HL&C 2/5/2024 3:15:00 PM
HB 289
HB 289 Presentation for HL&C (Version A).pdf HL&C 2/5/2024 3:15:00 PM
HB 289
HB 289 ver A.PDF HL&C 2/5/2024 3:15:00 PM
HB 289
HB 289 Sectional Analysis ver A.pdf HL&C 2/5/2024 3:15:00 PM
HB 289
HB 251 Sponsor Statement.pdf HL&C 2/5/2024 3:15:00 PM
HB 251
HB 251 Sectional Analysis.pdf HL&C 2/5/2024 3:15:00 PM
HB 251
HB0251A.pdf HL&C 2/5/2024 3:15:00 PM
HB 251
HB 237 Sponsor Statement.pdf HL&C 2/5/2024 3:15:00 PM
HB 237
HB 237 Version B.pdf HL&C 2/5/2024 3:15:00 PM
HB 237
HB 237 Dawn Hughes Letter of Support.pdf HL&C 2/5/2024 3:15:00 PM
HB 237
HB 237 Fscl Nt - DCC&ED.pdf HL&C 2/5/2024 3:15:00 PM
HB 237
Fiscal Note HB0289-1-2-012424-CED-Y.pdf HL&C 2/5/2024 3:15:00 PM
HB 289